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Corporate Responsibility 49

Why do sustainable investments and

sustainably managed companies

get so much more public attention now

when compared to ten years ago?

Giles Keating: Environmental, Social and

Governance ( ESG) issues are nothing new.

You can look back to the entrepreneurs

with a social conscience in Britain’s Industrial

Revolution who reacted to poor labor condi-

tions by building quality homes and provid-

ing services to their employees. And look

at the health, safety and environmental

legislation that every country has developed

over the decades, often in response to poor

ESG activities by companies! What is new

is the speed with which ESG failings, actual

or perceived, get publicized, be it via con-

ventional means or social media, as well as

the ability of groups to leverage such issues.

That in turn mobilizes consumer and gov-

ernment reactions more swiftly, ultimately

making investors more sensitive. Companies

no longer have the luxury of time. They need

to have proactive ESG strategies in place to

avoid issues, and they need procedures for

rapid, high-level responses when something

does happen. It’s natural for investors to

focus on companies that are prepared.

How can doing business sustainably

directly affect a company’s business

strategy and profitability ?

John Tobin: Let me start by pointing out that

sustainability goes with responsibly managing

the environmental aspects of the business.

Environmental sustainability is key, but it

doesn’t exist in a vacuum. Environmental

sustainability and financial sustainability

are closely connected. A company conduct-

ing business sustainably generally does so

because it has made a strategic decision

to focus on the longer term, and it is mak-

ing a clear statement that it seeks to man-

age environmental risks responsibly by min-

imizing their long-term impacts. But, it is

also saying that it seeks to produce con-

sistent, strong returns year after year,

rather than simply aiming to maximize returns

in the very short term, even at the cost of

longer-term profitability. >

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50 Corporate Responsibility

Doesn’t investment in a sustainably- John Tobin
managed company amount to accepting
an underperformance in exchange Head of Public Policy - Sustainability Affairs
for a clean conscience?
Giles Keating: Quite the contrary: compa- John Tobin, as the global head of Public Policy - Sustainability
nies with good governance that respect those Affairs at Credit Suisse, is responsible for managing environmental
and social issues. He joined Credit Suisse in 2002 from
Clifford Chance in New York, where he was mainly responsible
for cross-border financial business.

communities and the physical environment in

which they work, can perform better over a Stefan Keitel
period of time than those that ignore such Global Chief Investment Officer Asset Management and Private Banking

issues. Those latter firms might see sales Stefan Keitel is Global Chief Investment Officer of Asset Management
and profits suffer as their actions are rejected and Private Banking at Credit Suisse, chairman of the
by consumers and punished by governments. Global Investment Committee and the Global Asset Management
And there’s an issue of risk, as companies that Committee, as well as Co-Head of the product area Global
have low ESG scores can be more vulnerable Multi-Asset-Class-Solutions (MACS). He joined Credit Suisse
in 2001 from Prudential Securities.

to sudden adverse events, such as an oil spill or Giles Keating
accusations of poor labor conditions.
Head of Research Private Banking and Asset Management
Over 80 percent of global Fortune 500
companies already produce corporate Giles Keating heads Private Banking Research at Credit Suisse and
responsibility reports. What is motivating is responsible for research groups in Asset Management. He is
companies to increasingly monitor chairman of the Global Economics and Strategy Group, and vice-
corporate practices on sustainability chairman of the Investment Committee. Prior to joining Credit
Suisse in 1986 he was a research fellow at London Business School.

issues?

John Tobin: First and foremost, our stake-

holders and the broader public have higher

expectations of businesses than they used

to. The days when a business simply did what

it could, rather than what it should, are gone.

Today, businesses must make positive con-

tributions to society and create a sound and it is not really sustainable because charitable to providing benefits to the community and

stable environment if they are to keep their money is spent and then gone (even for an improving our physical surroundings.

social license to operate. As society seeks to endowment fund that endures, its income is Switzerland is the world’s fastest grow-

pull itself out of the financial crisis, the public channeled into projects). ing market in sustainable investments,

expects businesses, in particular banks, to On the other hand, social enterprises aim recording 40 percent growth per year in

behave responsibly. to combine those admirable end-objectives the last four years. What do you see as

Part of establishing a solid basis of trust with a model of financial sustainability. So, the main drivers of this trend?

and obtaining a clear understanding of the if you put money into a social enterprise, it Stefan Keitel: Catastrophes like Fukushima

issues at hand entails engaging in a fair and can be in a sense self-renewing in a way that or Deepwater Horizon caused investors to

open dialogue with clients, shareholders, regu- charitable money is not. Listed companies question what the impact is of their invest-

latory bodies, politicians and others in society. with good ESG scores are of course less ments on the environment and communi-

By producing reports describing company focused on social and environmental aims ties. With the recent and current market

contributions to society, a business initiates a than a charity or social enterprise, but they turbulence, awareness of sustainable in-

transparent discourse and provides an over- are likely able to operate on a large scale vestments has also gained importance. In-

view of how it generates long-term value for and also aim to be financially sustainable. creasingly the focus has shifted from the

the different stakeholders. This combination of scalability and finan- short-term towards favoring longer-term

What is the link between environmental, cial sustainability means that in some areas, sustainable investments.

social, and corporate governance invest- they may be a better vehicle than either a Investors, also in Switzerland, are growing

ments and philanthropy ? charity or a social enterprise when it comes increasingly aware that sustainable invest-

Giles Keating: I personally see a range from ing does not mean just focusing on high-risk Photos: Eva-Maria Züllig | Manjt Jari | Martin Stollenwerk

pure philanthropy through unlisted (and of- alternative energy projects and companies

ten rather small) social enterprises at one with innovative, but unproven technologies.

end of the spectrum, to listed (and usu- Elsewhere in Europe, especially Scandinavia,

ally larger) companies that have good ESG “Environmental sustainable investing has a long history and in
ratings on the other end. All of these en- some cases, is already part of the investment
tities are capable of doing positive things sustainability is key process by law. Therefore, driven by public
for the community and the environment, but but it does not interest in sustainable investments, a rising
each has a different approach to the future. exist in a vacuum.” demand in Switzerland is closing the gap.
Philanthropic money is 100 percent devoted
In what sense is Credit Suisse

to its social or environmental goal. However, John Tobin a sustainably managed company ?

bulletin 1/12  Credit Suisse

Corporate Responsibility 51

John Tobin: There are many ways in which “Increasingly focus has companies. The combination of our own val-
Credit Suisse is managed sustainably, and shifted from the uation experience, and the ESG knowledge
the manner in which sustainability has be- short-term towards of one of the oldest and most experienced
come part of the fabric of the organization research houses in this field, makes this fund
unique.
over time is very interesting. Initially, when favoring long-term
Credit Suisse took the strategic decision sustainable investments.” How has it performed relative
to incorporate sustainability into the way in to benchmark?
which the organization is managed it focused Stefan Keitel Stefan Keitel: The Global Responsible Equi-
ties fund has been designed to be as close as
on its own environmental footprint: how it possible to the DJ Sustainability World Index
and the MSCI World Index. Since inception in
manages energy consumption, the impact January 2009, the fund’s retail shares rose
by around 29 percent measured in euros (the
of business travel, recycling, and other direct fund’s currency). Over the same period, the
DJ Sustainability World Index rose by around
impacts of our business operations. el in order to generate sustainable earnings 32 percent and the MSCI World Total Return
(net) gained around 33 percent.
Over time, it became evident that the in this changing environment.
Looking ahead, do you see the
direct environmental and social impacts of a What is Credit Suisse doing to sustainable investment trend staying
limited to niche pure plays such
bank’s operations are very small compared to integrate the analysis of sustainability as clean tech, or do you see the
integration of ESG criteria becoming
the impacts of where it deploys capital, what factors into the investment process? an enduring trend in the global
investment community ?
industries it supports, and what projects it Stefan Keitel: Currently we follow a sequen- Giles Keating: It clearly will become more in-
tegrated, partly because ESG criteria are be-
finances. That’s when Credit Suisse start- tial investment process for sustainable man- coming easier to measure as companies im-
prove their reporting and better consolidate
ed looking a lot more carefully at the envi- dates and funds. In order to benefit from the their data. In addition, consumer, media and
political sensitivity to ESG issues looks to
ronmental and social risks associated with long-term experience of external research be rising, with social media progressing the
effects. Adverse ESG behavior now results
its business activities and managing those houses, we established ESG criteria and in hard financial effects (sales, fines, etc.)
more swiftly and more visibly. And I think
risks much more carefully, working both with best-in-class research. In a second step, we the niches themselves get much larger. For
example, look at the way electric vehicles
clients to improve their environmental man- intend to add our funded and proven valuation have gone over the last three years from an
esoteric idea to something embraced by all
agement and with other banks to agree on approach to the investment process, which major manufacturers worldwide.

industry standards to manage these risks. yields a very valid stock selection for equities. Where do you see Credit Suisse
in five years’ time with regard to
Finally, we are now at the stage where we In addition, we are continuously improving sustainable investing?
Stefan Keitel: In our view, sustainable invest-
recognize that sustainability is about think- our valuation methods in order to integrate ing should be part of every investment deci-
sion and investment process. We put all our
ing for the longer term and ensuring that we sustainable behaviors of individual compa- effort on becoming a preferred partner for
sustainable investors in Switzerland. Being
leave resources, both environmental and nies. We are convinced that companies pro- already one of the largest asset managers
globally, we have the ability, but also the will,
financial, to future generations. In connec- vide better yield over time when they have to drive sustainable awareness even further.
We aim to provide investors with our exper-
tion with this, sustainability thinking is be- sustainability principles in place as part of tise in sustainable investments; play a visible,
major and leading role in this field; and ben-
coming mainstream within the organization. their overall strategy.
efit from the continuous growth in this area.  ı
Beyond top management and a few special- Can you describe the investment
Unaltered Reprint from VR-Praxis 2/2011.
ist teams, many of our employees are now process of the Global Responsible www.vrpraxis.ch

thinking about our role in society and the Equities Fund?

impacts of our activities. It is becoming Stefan Keitel: We keep the investment pro-

widely understood that we not only need to cess for the Global Responsible Equities

ensure we act responsibly, but also that we Fund very simple. The basis for our stock

are viewed by others as acting responsibly. selection for this equity fund is the universe

At Credit Suisse we take economic, environ- of the MSCI All Countries Index. We exclude

mental and social aspects into account when all companies that are not compliant with

conducting business because we believe that the UN Global Compact regulations and all

an all-encompassing approach to corporate companies with measurable exposure to to-

responsibility is key to our long-term success. bacco, alcohol or weapons businesses. To

Of course, this also includes being aware make sure we have an independent filter,

of our regulatory environment and actively we are using research from GES Investment

taking part in the discussions around the Services. This is an independent Swedish

world on how to constructively redefine the Research company that focuses solely on

regulatory landscape. As a firm we will con- companies meeting the ESG criteria. On a

tinue to assess and adjust our business mod- regular basis, GES also screens our hold-

ings and certifies the appropriateness of the

selection according to ESG criteria, as

previously described here.

“Low ESG scores We then bring in our own experience in
may make companies valuing stocks in order to select the best eq-
vulnerable.” uities from the remaining universe. In addi-
tion, we take positive ESG criteria into ac-

Giles Keating count in order to select the best-in-class

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52 Leader
Interview with Morten Lund – Inventor of Skype, and Entrepreneur

“I want to change the world …

bulletin 1/12  Credit Suisse

Leader 53

Even millionaires go bankrupt. Danish entrepreneur and venture capitalist
Morten Lund found that out firsthand after the Internet calling software Skype
went down in 2009 and took every penny with it while sinking. A year after
filing for bankruptcy he was back on his feet. Now, the 37-year old is making
money again, but taking a more controlled approach.

bulletin: In 2009 you had millions at the bank. Skype and that was the smartest move I could have made in that

What went wrong? particular case. My advisors said I shouldn’t, but my stubbornness
Morten Lund: I went wrong. And so did the newspaper I invested
in. It was a very simple business: A free paper that went to a earned me a fortune. I would also never finance something with
million homes in Denmark every morning. Too simple. People really
liked it so naturally it became the country’s biggest newspaper. my personal guarantee again. That was stupid, but at the time it

Well, what killed it ? showed people that I was serious.
Advertising. Although we sold the most advertising space of any
paper in the country, we still couldn’t cover the massive cost of You would have been kicking yourself if you had
delivering a million newspapers each day. We were 66 percent of
the way but at one point during the financial crisis it became taken that advice on not investing in Skype. It must have
obvious that we were not going to succeed. We had to get out and
stop spending other people’s money. It was a tough choice but been the jewel in your investment portfolio and it has
I decided to take the hit and then figure out how to restructure.
revolutionized the way we communicate. What was your
How did you restructure?
The first four or five months were weird. I had to send myself role in its success?
e-mails to check if the server was actually working because
everything, all business activity, literally stopped. After a while, My job was to keep it as simple as possible. Unlike ICQ, an earlier
getting back on top became a challenge similar to those I had
faced in my experience with start-ups. I had to get myself but also successful calling and chatting software that was packed
out of bankruptcy and through it as fast as I could. Luckily too,
Denmark has some pretty fair bankruptcy regulations. with features, Skype consists of a clean user interface and

Your name was already well known in superior sound quality and that’s what people want. While ICQ is

entrepreneurial circles. It must have been tough packed with fancy features, we made them uncomplicated and

to open up and say, “Hey, I’m bankrupt.” simple to use.
I actually make a living from it now. I charge a fortune to speak at
events about the dos and don’ts of investing and the lessons You mean the user experience made Skype
I learned. But I don’t do it only to pay the bills; I’m serious about
the topic. That’s why I blog about it as well, it’s a bit like therapy the international hit it is today ?
for me and at the same time I can help other people – three birds
with one stone. To the rest of the world, however, it seems to Boiled down, its success can be attributed to the combination of
be a shock that someone would ever admit that they are bankrupt,
or, in my case, were bankrupt. a talented technology team, brilliant software and simplicity.

Will you tell us some of the dos and don’ts for free? Furthermore, as a peer-to-peer network, each user acts as an
I’m trying to make a living here! Here are a couple of tips: Do
listen to advice. I should have listened to more people and made individual server rather than all users calling over one central,
my investments following a different logic. But that’s not how
entrepreneurs tick. However, I didn’t take advice on investing in overworked unit. The technical nitty-gritty is complex but on the

surface it’s this infrastructure that makes the software so fast,

as if you were on the telephone. This also made it very cheap to

roll out so we could offer it to the world free of charge. Everyone

likes freebies, so that also played a big role in its success.

And the market reacted positively from the word go?

The timing couldn’t have been better. Once the technology was

ready the market was suddenly there, too. Laptops with sound

card slots and speakers became popular and those components

combined with our software turned laptops essentially into just

very big phones with screens. The early computers, those huge

Photo: Peter Sorensen old machines, had no integration whatsoever. You needed special,

expensive speakers and an engineer to make it all function.

All of a sudden, and fortunately for us, everything appeared in

a single, easy-to-use package at just the right time: the stars,

moon and our software were suddenly aligned. >

Credit Suisse  bulletin 1/12

… and I will do it with software.”

Leader 55

Photo: Peter Sorensen  |  Illustration: Istockphoto You made a mint from the sale of Skype to eBay. “Skype’s success can be attributed to the
combination of a talented technology team,
From the perspective of Morten Lund today, what’s it like brilliant software and simplicity.”

being in the shoes of a multimillionaire? sive within the niche you want to go. If not, you’ll have a bunch
I know this sounds ridiculous, because everyone wants cash and I of volunteers running the plot who are there because they
know I’ll be very rich soon, but it’s nice to be brought back were the only people available, not because they are passionate
down to earth and understand the value of money again. It has about it. That simply won’t work. Passion means everything.
made me sharper. Along with 99 percent of the population, I have Philanthropy is a serious thing for the givers and the getters and
realized that you can’t buy everything you want. You have to it’s very important that it provides a chance for the givers to
make choices: You must choose between that fancy camera, nice get more than just rich on honor. But in general it’s an impossible
jacket or posh hotel room. You get one, not three. The funny topic: How do you actually make a person rich out of philanthropy ?
thing is that I was just your average Joe Bloggs who tried to be silly
rich, was successful at it for some time and then got thrown back What are you passionate about ?
down to reality. Not everyone tries that. Above all, people. It’s fascinating to see five weird guys get
together and grow a crazy idea into something massive, something
Being rich prevented you from being able to make choices? viral. That’s highly addictive.

Sounds like the familiar saying, “more money than brains.” Sounds like the Skype story. Would you say
Almost. I had it all, so I couldn’t imagine why it wouldn’t be my that you are successful?
responsibility to pay for my friends’ apartments and all kinds of Compared to some of the guys I went to high school with, yes.
other crazy things. I paid for every dinner I attended and I thought But they also probably think that I’m completely nuts and
it was my duty to do so. It just goes to show that newly rich that’s okay because I dared, I stepped out and tried something
people are crazy; they don’t know how to handle their money. they didn’t. Unlike some of those guys too, I’m not from a
I wasn’t born rich so nobody taught me the rules. very intellectual or wealthy family, but I still became successful in
my own right. Compared to my heroes, however, no, I’m not a
You use the word “focus” a lot on your blog. success.

You want to focus on a couple of companies, rather Who are your heroes?
Some technology geeks who have been outlining the infrastructure
than dozens now. Is the focus strategy working? of the online world. I also look up to people like Richard Branson
It’s all really just a cover-up. I am trying to control myself but and a few politicians – game-changing people. Compared to them
I would love to start more companies. I just have to figure I’m nothing. Although I don’t actually aspire to get to that level,
out the right structure and way to do things. Doing less is actually I have no problem stating that I want to change the world and I will
more fun because I can keep better control of what I’m doing. That do it with software.
became clear when I had money invested in more than 80 running
projects at the same time. Right now, I’m focusing on two Where does your happy-go-lucky attitude come from?
companies: Everbread, a travel search company, and Tradeshift, From being an only child, although it does make you a little
the world’s first open business network. Both are well positioned messed up. You get too much attention, too much love, too much
to be huge success stories. They are based on software that of everything and you think there’s nothing you can’t do or have.
everybody uses, everybody needs and they make lives easier. That made me confident, perhaps a little too confident, and I
always knew I would someday do something influential. I started
Do you consider yourself to be a role model? my first sizable business with a couple of mates when I was a
I would be disappointed if other people took me too seriously as student, an equipment company selling caps and T-shirts for
a role model, but being a funny role model would be okay. I do, graduates. We secured 95 percent of that market in Scandinavia
however, inject ideas into peoples’ heads that make them go home over two years when I was 19 years old. It all went uphill, or
and say, “Stuff this office job, I want to revolutionize the world. downhill depending on how you look at it, from there.
I want to make cupcakes and have fun with it.” If people don’t like
me or my work, great – it means that they have an opinion. What’s really important to you now ?
While it can sometimes be difficult for people around me, you My family and my girlfriend, Josephine. They carried me through
generally learn to live with it. the hard times in 2009. It wasn’t hell, just hard, like losing
your job. The good thing about the work I’m doing now, sharing my
So imagine that I do go home and decide to go experiences and knowledge, is that we can travel around
together. Sometimes the amount of money a person has makes
into the cupcake business, but I need money them forget about the value of family. But I can say from firsthand
experience that you can’t ask for more than a loving, supporting
to get going. What do I need to do to convince you family.  Interview: Cushla K. Sherlock

to invest in my business idea?
Get my attention and prove something. I’ll then take all the
knowledge I have and use it to decide whether the idea is worth it.
It also has to be something that I understand and that screams
big business – so not really cupcakes. Nowadays a lot of people
use their credit cards to make purchases over the Internet, for
example. That signals huge business online and those are the kind
of bells I’ll be listening to.

Speaking of big business, what are your

views on philanthropy ?
That is a big one. Strategically speaking, it’s easy: If you’re into
philanthropy it has to be profitable, business-driven and aggres-

Credit Suisse  bulletin 1/12

56 Leader

Keeping Federer Fit

At the age of 30, Roger Federer remains in peak condition. Much of the credit for
that goes to Pierre Paganini, who has known Federer since he was 13 years old
and whose role goes well beyond fitness coach.

He’s the bald guy in the baseball cap. Federer in 1994 as a promising 13- Photo: Jack Flash, Getty Images
Behind the spectacles is a keen mind year old. The pair has worked together
and a self-effacing demeanor. Pierre on a private basis since August 2000.
Paganini is not one to grab the spot- At the end of that year, he drew up a
light. In the more than 11 years he’s three-year plan for Federer, then 19,
helped Roger Federer stay in peak form, that provided the foundation for his rise
he’s seldom been seen courtside – even to tennis stardom. The chemistry has al-
then, it’s usually in a crouch, as though ways been good. “Roger is a fantastic person
trying not to draw attention to himself. “I don’t and that makes working with him so much eas-
want people to focus on me,” Paganini says, who ier,” says Paganini. “He’s an artist who knows the
rarely gives interviews. He abhors coaches who put them- value of hard work.” Paganini has been a member of Federer’s
selves in the spotlight. “In the end, it’s the player who goes out onto innermost circle for years. His opinion is often sought and always
the court. Just look at soccer. Sometimes the only name you hear respected. He is aware of how lucky he is. “We can speak freely,
is the coach’s. I think that’s wrong.” At 54, Paganini is still strong nobody bothers us and that helps enhance the quality of the work.”
and wiry. Never an elite athlete, certainly not a world-class tennis
player, he and Federer played tennis only once. That seems to have The Right Thing at the Right Time
been enough: “I ran around for about 10 minutes and never even
saw the ball!” Since 2003, Pierre Paganini has also worked as the private trainer
of Stanislas Wawrinka, Federer’s Davis Cup partner and fellow
“Paga,” as his friends call him, lives in Zermatt and Dubai. He doubles gold medalist at the Beijing Olympics. He works with
trains regularly with Federer in the United Arab Emirates, planning Federer between 140 and 160 days each year, and devotes about
to use that as a base for travel with his wife, Isabelle, also a fitness 70 days to Wawrinka. The ingenious programs consisting of three or
coach. Born in Zurich, his late father Rõé was a pianist who also four basic blocks distributed throughout the year can be adjusted at
opened music schools in Switzerland. His mother, Maria, was a short notice should, for example, a player need to deal with minor
professor. In his youth Paganini was also musical, starting at age 4 injuries. Paganini’s work usually is done far away from tournaments.
with the violin. But he always loved sports. “I remember watching “Doing the right thing at the right time,” is one of his mottos. “The
the 1970 World Cup final between Brazil and Italy. My co-workers dosage is enormously important,” he says. “Roger is very good at
were interested in what was happening on the field. I was the only listening to what his body is telling him. You have to do things when
one wondering what had gone on before the match.” His early clients they produce the greatest benefit.”
included tennis player Marc Rosset, the gold medalist from the
1992 Olympics, with whom he worked for 17 years, along with the At 30, Federer has to train differently. “Anticipation and planning
Maleeva sisters, Manuela and Magdalena, both world-class players, have become more important, especially now that he’s the father of
and later Ana Ivanovic. In 1991, he began working with the Swiss two young children. That’s a real challenge,” says Paganini. “But,” he
Davis Cup team, continuing until 1995 before returning again from adds, “in tennis you’re not old at 30. Someone who has played 1,000
2003 to 2008. The method developed by him is still used today at matches may not have the stamina that they used to have, but they
an intensive training center in Bienne, Switzerland. certainly know their way around the court. And in this sport, it’s
often the small things that make the difference. The key thing is to
Working With an “Artist” Who Values Hard Work adjust the planning and to establish the right balance between
preparation, tournament play and recovery time. I’m absolutely cer-
He was among the drivers when Swiss Tennis set up a new program, tain that as long as Roger wants to play tennis and stays fit and
“Tennis/etudes,” to develop young players, through which he first met healthy, he’ll play extremely well.”  Text: Marco Falbo

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Foto: Muster Mustermann  |  Muster Mustermann

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